Pyth focuses on providing on-chain price data for derivatives, lending, synthetic assets, and DeFi use cases, while Chainlink not only provides price data but also pays great attention to areas such as NFTs, gaming, and cross-chain bridges. So what are the differences between the two in terms of oracle design? SuDo Research, a blockchain research institution, has conducted a comprehensive comparative analysis, including data suppliers, price transparency, and risks.
1) From the perspective of data providers, Pyth is incubated by Jump and obtains price data directly from multiple market participants including traders, market makers, and exchanges. Chainlink, on the other hand, obtains price data from an oracle network consisting of development and infrastructure groups such as Blockdaemon and stakefish, who obtain data from data aggregators such as CoinMarketCap and CoinGecko, whose data sources are exchanges. 2) To save gas, price updates are generally only pushed when the deviation threshold is reached or after a certain time period, so updates may be delayed during on-chain congestion. In Pyth V2 (using Pythnet), users can pull on-chain prices as needed without permission and choose to pay higher gas fees to push updates. In late 2022, Chainlink announced a new product, “Low-Latency Oracle,” which will be first launched on Arbitrum’s GMX V2. In this model, prices will be aggregated off-chain and atomically verified by the on-chain Chainlink contract.
3) In terms of price transparency, Pyth has higher transparency, although this may lead to front-running. Chainlink’s new product, Low-Latency Oracle, has more off-chain components and can maintain more price privacy. Overall, Chainlink uses more aggregation layers and is more capable of preventing price manipulation. 4) In terms of price aggregation, Pyth’s data provider reports a price and a confidence interval that are based on staking aggregation, while Chainlink chooses to report the median price in the oracle network, which may trigger circuit breakers if the price deviates from a pre-set range. 5) The PYTH token has not yet been launched, and currently, LINK is only used to pay service fees, but its roadmap also mentions delegation and insurance. In addition, Chainlink’s staking has a limit and is currently in the early testing phase.
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6) In terms of price manipulation risk, Pyth is more susceptible to manipulation because attackers can use PYTH to provide higher staking weights for low-liquidity trades and manipulate prices. In addition, Pyth’s front-running is a problem, but it can be mitigated by delaying order execution and giving users the option to execute at future prices and limiting liquidity and charging higher fees. As for cross-chain bridge risks, Pyth relies on Wormhole, so users need to trust Wormhole’s security, while Chainlink’s off-chain components also need to be trusted for fault tolerance.
Reference: https://twitter.com/SuDoResearch/status/1668210659253964806
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